CIT, JALANDHAR vs. MS. BABBAR AND CO.

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ITR/121/1995HC Punjab & HaryanaPHHC01032176199508 November 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was justified in confirming the cancellation of the penalty. The Court relied on its own judgment in Income-Tax Officer v. Kaysons India (2000) 246 ITR 489. The reasoning was that section 271B applies to a default or failure to file the return along with the audit report on or before the specified date. In this case, the assessee had filed the return on December 31, 1990, which was a return filed under sub-section (4) of section 139. This return was duly accompanied by the audit report obtained in accordance with section 44AB. The Court found that there was no default of not furnishing the audit report along with a non-existent return, as the return under sub-section (1) of section 139 could have been filed up to November 30, 1990. Therefore, the default for which the penalty was levied was not covered by section 271B. The ratio decidendi is that a penalty under section 271B is not leviable if the audit report is filed along with a belated return filed under section 139(4), provided the accounts were audited and the report obtained before the due date.

What were the facts?

The Commissioner of Income-tax, Jalandhar (the Revenue) has filed a reference application before the High Court of Punjab and Haryana at Chandigarh against an order of the Income Tax Appellate Tribunal, Amritsar Bench. The Tribunal, in its order dated April 21, 1993, in I.T.A. No.898(ASR)/1992, had confirmed the order of the Commissioner of Income-tax (Appeals) cancelling a penalty of Rs.24,318/-. This penalty was levied under section 271B of the Income-tax Act, 1961, for the assessment year 1990-91. The assessee is M/s Babbar & Co., Jalandhar. The procedural history involves the levy of penalty by the Assessing Officer, its cancellation by the CIT(A), and confirmation of that cancellation by the ITAT.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the CIT(A)'s order cancelling the penalty of Rs.24,318/- which had been levied under section 271B of the Income-tax Act, 1961, in respect of assessment year 1990-91? Assessee's contentions: The judgment does not record any specific contentions made by the assessee before the High Court. However, the reasoning of the High Court implies that the assessee argued that the penalty under section 271B was not leviable. Revenue's contentions: The Revenue contended that the penalty under section 271B was rightly levied. The judgment does not detail the specific arguments of the Revenue, but it is clear they were seeking to uphold the penalty.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB,Section 139

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.121 of 1995 Date of decision: 08.11.2006 The Commissioner of Income-tax, Jalandhar. -----Applicant Vs. M/s Babbar & Co., Jalandhar. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Dr. N.L. Sharda, Advocate for the revenue. -----

ORDER: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, arising out of its order dated 21.04.1993 in I.T.A. No.898(ASR)/1992 in respect of assessment year 1990-91:- “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the CIT(A)’s order cancelling the penalty of Rs.24,318/- which had been levied under section 271B of the Income-tax Act, 1961 in respect of assessment year 1990-91?” We find that the issue stands covered against the revenue by the judgment of this Court in Income-Tax Officer v. Kaysons India (2000) 246 ITR

489.

After considering the relevant provisions, this Court observed at page 492:- “It is, therefore, evident that the default or failure to file the return along with the audit report on or before the specified date is not hit by the provisions of section 271B. It is not the case of the Revenue that the assessee has failed to get the accounts audited or has failed to obtain the report of such audit in terms of section 44AB before the specified date. It is also evident that no return had been filed either under sub-section I.T.R. No.121 of 1995 (1) of section 139 or in response to any notice under clause (i) of sub-section (1) of section 142 and as such there could possibly be no default of not furnishing the audit report along with such a non-existent return. The return under sub-section (1) of section 139 in this case could be filed up to November 30, 1990. However, the assessee had filed the return on December 31, 1990, which was a return filed under sub-section (4) of section 139 and this return was duly accompanied by the audit report obtained by the assessee in accordance with the provisions of section 44AB. Thus, according to us, the default for which penalty had been levied was not covered by the provisions of section 271B and the Commissioner of Income- tax (Appeals and the Tribunal were justified in holding that no penalty was leviable.” Accordingly, the question is answered against the revenue and in favour of the assessee. ( ADARSH KUMAR GOEL ) JUDGE November 08, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e

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